Annual Report 2013 Annual Report and Financial Statements 2013 The Wellcome Trust is a charity registered in England and Wales, no. 210183 Contents Chairman’s Statement 02 Trustee’s Report 04 Vision and objects, mission, focus areas and 04 challenges Financial Review 06 Review of Past and Future Activities 10 Review of Investment Activities 16 Structure and Governance 28 Remuneration Report 34 Social Responsibility 36 Audit Committee Report 39 Independent Auditors’ Report 41 Consolidated Statement of Financial Activities 44 Consolidated Balance Sheet 45 Statement of Financial Activities of the Trust 46 Balance Sheet of the Trust 47 Consolidated Cash Flow Statement 48 Notes to the Financial Statements 49 Reference and Administrative Details 85 Chairman’s Statement The best research for better health The Wellcome Trust is at its best the work was done at Diamond Light when catalysing interactions between Source, the UK’s national synchrotron researchers and other people, be they facility, which is funded by the researchers in different fields, people Science and Technology Facilities in business or politics, or members of Council and the Wellcome Trust. the public. We believe that science Diamond generates high-energy should be at the heart of life, but for it beams of electrons to investigate the to play its part in society people must physical properties of molecules and feel able to engage and partner with materials, and underpins much of the scientists to discover and create new UK’s strength in structural biology. opportunities. The Trust brings people together, enabling collaboration, Diamond’s role in developing the foot excellent research and, ultimately, and mouth disease vaccine was to better health. We committed £726 show the physical effects of million in grant funding and direct modifications to the vaccine’s Summary of Chairman’s charitable activities this year, mostly structure. A similar approach could be Statement in grants to scientists working in used to make better human vaccines medical research, and most of them in as well. The foot and mouth disease • We committed £726 million in grant the UK. virus is related to the virus that causes funding and direct charitable polio, which remains a threat despite activities this year, mostly in grants In last year’s Annual Report, I the success of a long-established to scientists working in medical mentioned that the first tenants had global vaccination programme, as we research, and most of them in the moved in at Stevenage Bioscience have seen by the re-emergence of the UK. Catalyst, a biotechnology ‘incubator’ disease in Syria this year. A new where life science companies can vaccine could help to redouble efforts • The UK’s scientific infrastructure, explore new ways of working and towards finally eradicating polio. to which Stevenage Bioscience bring convergent technologies Catalyst is an innovative addition, is together. Reflecting its vision of Investments an excellent foundation for openness and collaboration across Long-term investors are able both to achieving better health. companies and sectors, Stevenage be counter-cyclical and patient. Bioscience Catalyst is a joint venture Having significantly increased our • We launched a new scheme this between the Wellcome Trust, the UK exposure to public and private equity year, Sustaining Health, to government and GlaxoSmithKline. holdings in the period between 2008 encourage and support research in There are now 26 tenants on the site, and 2011 when many investors had areas such as the health impacts of more than 70 per cent of capacity. It is become risk-averse, we have reaped climate change, connections hugely exciting that there is such the rewards in the last two years as between ecology and public health, demand from British businesses to use they have again embraced risk assets. global nutrition and behaviour the site and I am sure some impressive In 2012/13, we enjoyed returns of change outcomes will follow. over £2.6 billion (18%) as our public equities, private equity holdings, • Over 10 and 20 years, returns have The UK’s scientific infrastructure, to venture capital funds, hedge funds and averaged 10% a year, enabling us to which Stevenage Bioscience Catalyst residential property interests all increase progressively our is an innovative addition, is an recorded gains of 15-20%. Returns in commitments to medical research. excellent foundation for achieving the five years since September 2008 better health. For example, a new have exceeded £7 billion (57%). Over vaccine was created this year to 10 and 20 years, returns have protect cattle and other livestock averaged 10% a year, enabling us to against the virus that causes foot and increase progressively our mouth disease. The team included commitments to medical research. academic scientists from the Universities of Oxford and Reading Danny Truell and his investment team and researchers at the Pirbright continue to evolve our portfolio in Institute, which is funded by the order to ensure that we have greater Biotechnology and Biological control of our destiny and that our Sciences Research Council. Part of long-term returns are driven more by 02 | Annual Report 2013 Chairman’s Statement (continued) the evolution of businesses than by started the role in October 2013. Chair: Kay has been on the Board of short-term market fluctuations. Jeremy trained as a medical doctor Governors for the past six years and I and clinical researcher in the UK, and am looking forward to working with For example, our directly managed has spent the last 20 years leading the her in this role as well. Mega Cap Basket of 31 holdings in Trust’s Major Overseas Programme in large companies, valued at £3.4 Vietnam. His experience of building Another of our Governors, Professor billion, is the cornerstone of our international partnerships and respect, Anne Johnson, was made a Dame in equity holdings. Initiated in late 2008, especially in South-East Asia, will be the Queen’s Birthday Honours – it has returned 55% on cost: last year, of great value, as will his global congratulations to Dame Anne, and we neither added new holdings nor vision and experience. With a new also to Professor Steve O’Rahilly, co- sold any shares in existing holdings. Director, the Trust continues to Director of the Medical Research evolve: Jeremy will use his distinctive Council-Wellcome Trust Institute of Over 80% of our portfolio is now perspective to build on the work and Metabolic Science, and Professor concentrated in 42 directly-held public wisdom of our former Directors, as Mike Stratton, Director of the or private assets and in 51 external did his immediate predecessor, Sir Wellcome Trust Sanger Institute, who partnerships, each with a value Mark Walport. both received knighthoods this year. exceeding $100 million: of these partnerships, half are at least a decade I extend my heartfelt thanks to Mark old. Our cash flows have become for ten years of distinguished increasingly positive and reinvestment leadership of the Trust, which came to risk has risen: hence, we shall need to an end in March 2013 when he left to be disciplined in focusing new become the Chief Scientific Advisor investments on assets which will to the UK Government. As Director, genuinely add long-term value Mark enhanced the professionalism of Sir William Castell irrespective of geography or industry. the Trust and bestowed a clear sense Chairman of the Wellcome Trust of purpose underpinned by a well- A world of knowledge articulated strategy. Achievements in 17 December 2013 The big health challenges of the future progressing scientific understanding will be global: every country will be were complemented by a programme affected by the changing climate, of scholarship to support and develop increasing population and more researchers and scientific leaders for people living in cities. How we the future. respond to the pressure these factors put on our health will depend on I would also like to thank Dr Ted national and international policies Bianco, our Director of Technology which, in turn, draw on whatever Transfer, for standing in as Acting scientific evidence is available. At the Director for six months, as well as the Trust, we want to ensure that the entire staff: it is the people in the evidence base is as robust as possible. Trust and those we work with, including application reviewers and We launched a new scheme this year, our funding committee members, who Sustaining Health, to encourage and make our vision into a real success. support research in areas such as the From our Investments Committee, I health impacts of climate change, would particularly like to connections between ecology and acknowledge the contribution of public health, global nutrition and Stewart Newton, chairman of Veritas behaviour change. These are relatively Investment Management, who stood new fields of research and bridge down this year. previously unconnected disciplines, so once again the Trust is looking to Great thanks and recognition also to catalyse new initiatives, approaches Professor Peter Rigby for the breadth and collaborations that could help of his scientific support and map out routes to a sustainable future. constructive challenge as Deputy Chairman of the Trust for the last A global outlook comes naturally to three years. Professor Kay Davies has our Director, Dr Jeremy Farrar, who now taken up the position of Deputy Annual Report 2013 | 03 Trustee’s Report Vision and objects, mission, focus areas and challenges Our vision and